Business in the Cloud - Michael H. Hugos - ebook

Business in the Cloud ebook

Michael H. Hugos

129,99 zł


A close look at cloud computing's transformational role inbusiness Covering cloud computing from what the business leader needs toknow, this book describes how IT can nimbly ramp up revenueinitiatives, positively impact business operations and costs, andhow this allows business leaders to shed worry about technology sothey can focus on their business. It also reveals the cloud'seffect on corporate organization structures, the evolution oftraditional IT in the global economy, potential benefits and risksof cloud models and most importantly, how the IT function is beingrethought by companies today who are making room for the comingtidal wave that is cloud computing. * Why IT and business thinking must change to capture the fullpotential of cloud computing * Topics including emerging cloud solutions, data security,service reliability, the new role of IT and new businessorganization structures * Other titles by Hugos include: Business Agility: SustainableProsperity in a Relentlessly Competitive World andEssentials of Supply Chain Management, 2nd Edition Practical and timely, this book reveals why it's worth everycompany's time and effort to exploit cloud computing's potentialfor their business's survival and success.

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Copyright © by Michael Hugos and Derek Hulitzky. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data

Hugos, Michael H.

Business in the cloud: what every business needs to know about cloud computing/Michael H. Hugos, Derek Hulitzky.

p. cm.

Includes index.

ISBN 978-0-470-61623-9 (hardback); ISBN 978-0-470-91702-2 (ebk);

ISBN 978-0-470-91703-9 (ebk); ISBN 978-0-470-91704-6 (ebk)

1. Electronic commerce. 2. Cloud computing. 3. Web services. I. Hulitzky, Derek, 1961- II. Title.

HF5548.32.H855 2010

004.3′6–dc22 2010023272


10  9  8  7  6  5  4  3  2  1

Michael Hugos: To my wife Venetia Stifler

Derek Hulitzky: To my parents and my children



Title Page



Praise for Business in the Cloud



Chapter 1 - The Evolution and Future of Corporate Business Structures

Example of a New Corporate Organization Structure

Model of a Responsive Organization

A Cybernetic Economy

Cybernetics Is about Control and Communication

Profit Potential of Self-Adjusting Feedback Loops

Viable Systems Model: A Framework for Business Agility

A Cloud-Based Model for Business Organizations


Chapter 2 - The New Economics of Business

Moving to a Variable Cost Operating Model

Information Technology Finally Becomes a Utility

Variable Cost IT Operations Enable Business Agility

A Combination of Technologies Creates Cloud Computing

Implications of the Transition to Cloud Computing


Chapter 3 - Key Technologies Used in Cloud Computing

Cloud Computing Defined


Server Virtualization

Service-Oriented Architecture

Open Source Software

Web Development and Mashups

Blending It All Together


Chapter 4 - Data Security and Service Reliability

Will Your Cloud Service Provider Be Here Next Year?

What to Look for in a Good Service Provider

Elements of Good Data Security Policy

Cyber Threats and Perimeter Security in Cloud Computing

Encryption: The Next Frontier of Data Security

Contracts, Service-Level Agreements, and Guarantees

Negotiating Service and Pricing

Performance Penalties and Restitution Clauses


Chapter 5 - Moving to the Cloud: When and Where

A Business Strategy Based on Agility

Using the Cloud for Business Advantage

Business Applications with the Greatest Potential

Risk Considerations with the Cloud

Cloud Cost Considerations

Case Study: Selling “Designer Chocolates”


Chapter 6 - The Transition from Managing Technology to Managing Business Processes

The Fixed Cost of Maintaining Large Data Centers Is Being Challenged

Public, Private, and Hybrid Clouds

Issues to Consider with Private Clouds

The Cloud Is a Platform for Managing Business Processes

Automate Routine Processes and Focus People on Handling Exceptions

Four Technologies that Enable Responsive Business Processes


Chapter 7 - The New Role of Information Technology

Is Traditional IT Irrelevant?

A Tumultuous Ride for the Chief Information Officer

The End of IT as We Know It

Changes in IT and Business Unit Staffing

Evolution of the Traditional Corporate IT Department

Agile IT Professionals Using Cloud Technology Will be Embedded in Business Operating Units

Cloud Computing Separates Data Center Operations from System Development

Do We Need Enterprise Technology Architects or Business Architects?

Companies Are Investing in New Business Process Design

A Renewed Focus on Using Technology for Profit and Competitive Advantage


Chapter 8 - Five Profit Enablers Driving Business to the Cloud

Harvard Medical School

Golden Gate University

Silicon Valley Education Foundation

Five Profit Enablers Driving Business to the Cloud…and Away from Corporate Data Centers


Chapter 9 - The Business Impact of Cloud Computing

New Economic Engines for Growth

Time to Get Agile and Reinvent Traditional Business Operations

Get Ready, Get Set, Go: Success in a Real-Time Economy

Interconnected, Adaptable, and Specialized

Collaboration Is Now More Profitable than Control

Necessity Makes Radical the New Normal

The Recovering Complexaholic


Chapter 10 - Global Implications of the Cloud

Real-Time Global Collaboration

Serious Games

Cloud-Based Collaboration Enables a New Way of Working: The Dynamics of Swarming

Real-Time Visibility Could Make Us a Whole Lot Smarter

New Realities and New Opportunities


About the Author


Praise for Business in the Cloud: What Every Business Needs to Know About Cloud Computing

In Business in the Cloud, Michael Hugos and Derek Hulitzky explain the many changes that cloud computing is bringing to technology, organizations, and industry ecosystems. Their book is a tutorial written in simple language to help readers understand the potential of the cloud to transform every industry in the years ahead. Business in the Cloud is highly recommended for anyone who wants to take advantage of the many opportunities being brought by cloud computing to business and society.

—Irving Wladawsky-Berger

Chairman Emeritus, IBM Academy of Technology;

Strategic Advisor, Citigroup; Visiting Professor, MIT;

Visiting Professor, Imperial College

The Weather Channel is making cloud computing a cornerstone in its architecture to support severe weather events like hurricanes and nor'easter blizzards. Business in the Cloud is a concise but informative insight into cloud computing, is a great tutorial to quickly educate yourself (without vendor biases) on the options and capabilities of cloud computing, and should be read by all business and IT leaders responsible for their organization's infrastructure.”

—Dan Agronow

Chief Technology Officer,

The Weather Channel Interactive, Inc. (TWCi)

In today's complex business environment, flexibility and efficiency are the difference between the companies that flourish and those that perish. Business in the Cloud is an excellent resource to help business leaders think through the practical implications of how to best leverage the technical infrastructure required to thrive in the twenty-first century.

—Larry Bonfante

Chief Information Officer,

United States Tennis Association;

Founder, CIO Bench Coach, LLC

When a new technology platform emerges, business leaders need to understand its implications for their companies. Michael Hugos and Derek Hulitzky shift the cloud computing conversation from speeds and feeds to business opportunities and benefits. If you lead an organization that integrates business activities with technology—and today, that means everyone—this is a must-read book.

—Bernard Golden

Chief Executive Officer, HyperStratus

Whether you're currently operating in the cloud, considering moving to the cloud, or just trying to understand the meaning of cloud computing, Business in the Cloud explains the potential of this new model for success. A comprehensive work covering all facets to consider for the delivery of business solutions, opportunities, and customer satisfaction, Business in the Cloud is a must-read for all business executives tasked with leading in today's technology-mandated world.”

—Michael J. Twohig

Executive Vice President and Chief Administration Officer,

Clean Harbors Environmental Services, Inc.

Michael Hugos and Derek Hulitzky have finally given us what is missing in the swirl of all the “cloud” hype—a context. In a highly accessible manner they successfully set the stage to enable businesses to strategize and maximize the true value of cloud computing. From organizational implications, to the raw economics, to the technology itself, they provide a needed step forward and have advanced the field.

—Dr. Howard A. Rubin

Chief Executive Officer and Founder,

Business in the Cloud lays a solid foundation of the technical components that enable business growth and innovation potential in the cloud. It offers a compelling case as to why the cloud should be a part of every IT leader's strategic plan now. This book is a must-read for every business executive looking to understand how it is vital that technology align with the enterprise in our new Internet age.

—Jessica Carroll

Managing Director, Information Technologies,

United States Golf Association

Business in the Cloud delivers great insight into the genesis of cloud computing—and its business application—from two guys with their feet planted firmly on the ground.”

—Enzo Micali

Executive Vice President, Technology & Operations/

Chief Information Officer, Harris Interactive

At the end of the day, the cloud computing ecosystem advances the capability for systems to work for people—rather than people working for systems. And as a technology, it is equal to—or greater than—the invention of the local area network (LAN). Business in the Cloud does a great job of translating the real-life thinking and effort required to adopt cloud computing—and captures the profound change potential across technology infrastructure, applications, and IT professionals.

—David Giambruno

Senior Vice President and Chief Information Officer, Revlon

2009 CTO of the Year—InfoWorld

Cloud computing may likely be the next foregone conclusion, driven primarily by two key forces: (1) a flexible pay-as-you-need operational cost model and (2) the growth of software-as-a-service (SaaS) solutions and application offerings. If needed improvements in security and performance monitoring come as promised, it will sway CIOs to let go of their data centers and shift to the cloud paradigm. Business in the Cloud provides both business leaders and IT executives with everything they need to make an informed decision on the shift to cloud computing.

—Gregory S. Smith

Chief Information Officer and author of Straight to the Top:

Becoming a World-Class CIO and How to Protect Your

Children on the Internet: A Road Map for Parents and Teachers


The level of debate and confusion in many areas of our lives makes many things hard to see, yet also makes one thing perfectly clear. The intensity of debate and confusion are proof in themselves that big changes are under way. We have arrived at what has been variously called a “tipping point” or an “inflection point” or a “perfect storm.”

Tried-and-true formulas and business models from the last 50 years no longer deliver the results they once did, and it is still far too soon to see the exact nature of the new formulas and business models that will replace them. Yet, again, this makes one thing quite clear. For the foreseeable future, organizations need to learn to thrive in environments of continuous change. Change itself will be a constant fact of our lives.

Therefore, if change is the one predictable thing in a world where so much else is so unpredictable, companies optimized to deal with change will certainly be more successful than companies not optimized to deal with change. That is why successful response to change is the new business imperative, and the practices and technologies that bring it about are the basis for sustainable prosperity in this century.

Cloud computing arises from the combination of technologies that have been developing over the last several decades. And the ongoing rapid evolution of cloud technology is driven by the pressing needs of organizations to cope with change in their markets and change in their financial situations. In a time where information and communication technology is now mission critical to every facet of business operations and where safe bets are hard to find, it is safer to explore new markets and new ventures on a pay-as-you-go basis instead of investing a large sum of money up front and hoping the investment pays off.

Cloud computing makes this possible. It can be quickly rolled out; it can be quickly scaled up to handle increased volumes if business takes off; and it can be just as quickly discontinued or scaled back to cut costs if business does not take off. This variable cost operating model allows companies to replace capital expenses with operating expenses, and that is critical to any organization operating in high-change, unpredictable environments. Cloud computing enables companies to best align operating expenses with revenue and protect their cash flow and operating profits.

In addition to its financial impact, cloud computing also affects how companies structure their organizations, how they manage and coordinate their daily operations, and how they engage and motivate their people and their business partners. In this book we explore each of these areas and show how they interact with each other. To further illustrate key points we draw on our own personal experience in business and technology and we use case studies and insights from industry thought leaders and practitioners.

This book is divided into three parts. The first two chapters provide a basis for understanding and discussing the changes we are going through. They discuss new organization structures companies are adopting and new economic realities that companies need to address. The next six chapters define cloud technology and describe strategies, tactics, and lessons learned that companies can use to adopt cloud computing and to put it to effective and profitable use. The last two chapters expand upon the information in the previous chapters and offer insights into successful business practices and operating models as well as thoughts about the global, cultural, and societal impact of cloud computing.

We have worked hard to make this book accessible to a broad audience of readers from business, technical, and academic backgrounds. As best we could, we balanced the need for a comprehensive framework to understand cloud computing and its business impact with the need for a simple and direct discussion of the key points without delving so deeply into specific details that we lose the interest of a large number of our readers. Our intention is to give you a body of knowledge and insights that enables you to engage in a thoughtful and spirited conversation with others about how to navigate the profound changes that are reshaping the way we use technology and the way we conduct business.

We would love to hear from you regarding questions, comments, or issues you have about the book and the ideas we put forth. Please feel free to contact us; our email addresses are shown below.

Michael Hugos

Chicago, IL USA

[email protected]

Derek Hulitzky

Milford, MA USA

[email protected]


We want to thank all the people who helped us with our research and shared their insights and opinions about cloud computing and its impact on business. Some of these people are named in the text of the book and others are not, yet all of them have contributed to our thinking and the ideas we present here.

In alphabetical order, these people (and their companies when relevant) are:

Yuri Aguiar – Ogilvy Worldwide

Peter Alsberg – eCD

Mike Bogovitch – Burn the Box, Inc.

Phaedra Boinodiris – IBM

Nicholas Carr –

Andres Carvallo – Austin Energy

Muhammed Chaudhry – Silicon Valley Education Foundation

Willy Chiu – IBM

Alan Cohen – Cisco Systems

Ken Collier – KWC Technologies, Inc.

Pat Condon – Rackspace

Frank Enfanto – Open Sky Corporation

John Engates – Rackspace

Alan Ganek – IBM

Gene Glaudell – eCD

Bernard Golden – HyperStratus

Anthony Hill – i3Logix

Jeff Keltner – Google

Kristof Kleckner – IBM

David Knight – Cisco Systems

Ed Laczynski – LTech

Michael Martine – IBM

Tony McDonald – CSC

Steve Morlidge – Satori Partners

Srini Murti – E2open

Eric Newhuis – eCD

Jim Petrassi – CSC

Rick Pittard

Howard Rubin – Rubin Worldwide

Paul Saffo –

Mor Sela – Navajo Systems

Bob Sutor – IBM

Peter Tonellato – Harvard Medical School

John Treadway – Unisys

Steve Winshel –

Irving Wladawsky-Berger – IWB LLC

Russ Young – LTech

Jeff Kaplan – THINKstrategies

Ken Male – TheInfoPro

Chapter 1

The Evolution and Future of Corporate Business Structures

In 1991, Ronald Coase won the Nobel Prize in economics after a lifetime of influence that began with the 1937 publication of his renowned paper entitled “The Nature of the Firm.” In this paper, Coase asked (and then answered) the lofty question of why corporations form in a free market economy. Coase's point was simple: If there really are free and efficient markets, then a corporation can get any service it wants from a free market of independent contractors. Despite this free market, however, he cited the range of additional costs related to searching for, contracting, coordinating, and eventually paying for these services. And he showed how these costs ultimately made it more expensive to secure services in the open market versus bringing them in-house.

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Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!